Analysts at MUFG Bank, point out the Eurozone economy is beginning to pick-up, but hey warn the outlook remains highly uncertain. They see the downside risks for the euro have eased, but at the same time, limited upside potential for now.
“EUR/USD attempted and failed to break above the 1.1000-level in recent days amidst the broadening USD sell off. It takes the pair back towards the middle of 1.0800 to 1.1200 trading range that has been in place for the majority of the time since last summer. Even more notable has been the EUR’s advance against both the CHF and JPY. It is the largest move higher for EUR/CHF since last November. Spot price action has triggered some excitement that the EUR is at a turning point. Demand for EUR/USD downside protection in the options market has also eased especially covering the next three months.”
“There are two main drivers providing more support for the EUR in the near-term. Firstly, there is building optimism that the euro-zone economy is through the worst of the COVID-19 crisis. (...) Secondly and more importantly has been the Franco-German proposal for an EU Recovery Fund.”
“We are not yet convinced that the EUR is set strengthen on a more sustained basis against the USD, CHF and JPY like in 2017. While we agree that downside risks for the EUR have eased, upside potential for EUR/USD should remain limited for now by the top of the 1.0800 to 1.1200 range.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.